Broncos, Russell Wilson Extension: Analyzing the New Details
The news broke early Thursday morning that the Denver Broncos and quarterback Russell Wilson agreed to a five-year, $245 million contract extension that will pay the veteran a total of $296M over the next seven seasons.
Wilson had two years left on his current contract, in which he was set to make $51M. Thus, it’s important to note that the $296M figure includes the money he was already set to make, and the $245M figure represents new money.
You’re going to hear a lot of interpretations from people about this contract, ranging from how it’s a great deal for the Broncos to how Wilson is the latest NFL QB to get paid well.
But, as they say, the devil's in the details. Andrew Brandt, Mike Klis and Jason Fitzgerald have all shared information on Twitter about the contract and its structure, which gives you a better idea about how good this deal really is for Wilson and the Broncos.
Let’s go over these details and see what they mean.
On one hand, the $245M in new money represents $49M in APY salary. On the other hand, the $296M he can make over the next seven years represents $42.2M in APY salary.
This is a good example of why APY salary, though it’s used often (and I’ve done this before), doesn’t tell the full story. Remember that Wilson was already set to make $51M in the next two seasons on his original deal.
Therefore, it’s important to look at the contract breakdown to get the real story about what Wilson will make, how it’s structured and what that means for cap hits. Here’s how that works.
2022: $50M signing bonus, $5M roster bonus, $2M base salary, all fully guaranteed, $17M cap hit.
The signing bonus will be paid to Wilson starting this year. It is pro-rated over the next five years, 2022 to 2026. Thus, just $10M counts toward this year’s cap hit.
2023: $20M option bonus, $8M base salary, all fully guaranteed, $22M cap hit.
An option bonus works like this: When a team exercises the option, it is pro-rated the same as a signing bonus. In this case, it will be pro-rated from 2023 to 2027.
This is the reason why the cap hit is as low as it is. Because the option bonus is fully guaranteed, it’s understood that it will be exercised and, thus, pro-rated over five years.
2024: $22M option bonus, $17M salary, all fully guaranteed, $35.4M cap hit.
Once again, the option bonus will be pro-rated once exercised. It will be pro-rated from 2024 to 2028. To this point, Wilson will have earned $124M over three years, making for a strong three-year cash flow.
2025: $37M base salary, fully guaranteed on fifth day of the 2024 league year, $55.4M cap hit.
If the Broncos exercise Wilson’s 2024 option as expected, his 2025 salary will be locked in. This means that Wilson will be in line for $161M in total guarantees.
The cap hit in 2025 is high, but it’s expected that league revenues will rise and, thus, the salary cap will rise, too. Fans shouldn’t worry about a restructure necessarily coming, because we have a long ways to go before we get to 2025.
2026: $40M base salary with reported injury protection, $58.4M cap hit.
It’s not clear from Klis’ reporting how much of Wilson’s salary is guaranteed for injury. However, if the Broncos move on for cap or skill reasons, they would eat at least $31.2M in dead money.
2027: $45M base salary, not guaranteed, $53.4M cap hit.
At this point, the Broncos will be in a better position to get out of the deal, whether it’s Wilson retiring or the Broncos just cutting him. The Broncos would take a $12.8M dead money charge if either scenario happened.
2028: $50M base salary, not guaranteed, $54.4M cap hit.
By this point, the Broncos hold the advantage if they want to let Wilson go, because they would incur just a $4.4M dead money charge. The only thing that may impact decisions in the final two years is if the Broncos do a restructure in 2025.
Broncos Baked in an Out
In summary, Wilson is in line to get paid well through 2025, but in 2026, the Broncos may have an out if Wilson is healthy and if the team wants to save some cash. In 2027, the Broncos will be in a better position to move on, meaning it’s possible that Wilson misses out on $95M in remaining money.
If Wilson stays with the Broncos through 2026, he will have earned $201M over five years. That’s certainly a lot of money, just not the same as it would be if he stays with the Broncos through 2028.
In terms of how it compares to others, Fitzgerald has a breakdown of the details at Over the Cap. It is a favorable deal for Wilson and in line with the numbers for most other quarterbacks who recently signed contracts.
Advantage, Broncos
Where the Broncos come out well is the so-called 'year zero' figures, or the figures before the extension actually takes effect. While Wilson will get a good amount of money, he’s getting a $34M raise over the next two years, less than the $53M raise he received from the Seahawks when he signed his last extension in 2019.
From a cap standpoint, the Broncos got $7M in cap relief for 2022 and lowered Wilson's 2023 cap number by $5M. That extra wiggle room will help with any needed roster changes during the course of this season, plus help with navigating the cap next season.
Getting cap flexibility next season will be important, because the Broncos don’t have much draft capital at this point and won’t have a first- or second-round pick, barring a trade to acquire such a selection (which I don’t think is likely to happen). This means the Broncos need cap space for either extending their own players or finding other free agents.
New Ownership Impact
On another note, there will be those who will claim that this contract is made possible by the new ownership. However, the reality is this: All teams who have a quarterback that they know they can build around are going to pay that quarterback and pay him well. They may differ in terms of contract length and structures, but the QB will still get paid well.
Most QBs are not like Tom Brady, who continues to take below-market deals. They're more like Kyler Murray and Patrick Mahomes, who play for teams that aren’t among the big spenders but will still re-set the market to some degree.
Mahomes does have a team-friendly deal in terms of contract length, but at the time, the average per year (APY) and guarantees reset the market. Murray also reset the market in APY and guarantees, even if he didn’t get a five-year, fully guaranteed deal like the Cleveland Browns gave Deshaun Watson (and that deal can certainly be called an anomaly).
Bottom Line
The truth is, the Broncos were going to have to pay Wilson at some point. The only question was whether the Broncos would get the deal done this year or wait until after the season. I thought it would be the latter, but I got that wrong.
I would be surprised, though, if the Broncos announce extensions for any other players at this time. Other players entering the final year of their deals need to prove themselves this season before any extension talks happen.
But the Broncos have made it clear they believe they can win with Wilson for years to come. All that’s left is for the Broncos to deliver on the field.
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